A federal
securities class action lawsuit has been filed against U.S. Steel
Corporation, on behalf of investors who purchased USS common stock between
Nov. 1, 2016, and April 25, 2017.

The gist of the
suit: that certain USS executive officers violated the Securities Exchange
Act of 1934 by making “materially false and misleading statements” during
that six-month period--“in press releases, analyst conference calls, and SEC
filings”--regarding the so-called and at the time much-vaunted
“transformational process” dubbed the “Carnegie Way.”

Specifically named
in the suit, filed by plaintiff Carmelo Ortiz in the U.S. District Court for
the Western District of Pennsylvania: Mario Longhi, who currently serves as
USS CEO and on the Board of Directors and who in the period in question also
served as president; and David Burritt, who became President and Chief
Operating Officer on Feb. 28, 2017, and who before that served as executive
vice president and chief financial officer.

As the suit notes,
throughout 2016, USS made much of the Carnegie Way, touting its two-phase
strategy--to “earn the right to grow” and to “drive and sustain profitable
growth”--as a way to “become an iconic industry leader”; to strengthen “our
balance sheet, with a strong focus on cash flow, liquidity, and financial
flexibility”; and to “improve (its) performance across (its) core business
processes.”

To that end, in its
annual 2016 report, filed on Feb. 28, 2017, USS pointed to $745 million of
specifically Carnegie Way benefits as a sign of “significant progress toward
our goal of achieving economic profit across the business cycle,” the suit
states. As USS put it, in that annual report, the “Carnegie Way has already
driven a shift in the company that has enabled us to withstand the prolonged
downturn in steel prices while positioning us for success in a market
recovery.”

The suit further
notes that investors had other reasons to expect better financials from USS.
During that six-month period, “steel market conditions improved
substantially,” the suit states. “Indeed, in the first quarter of 2017, the
average price of U.S. hot-rolled steel coil . . . rose 55 percent from a
year earlier, helped by successful U.S. trade cases against foreign imports.
By all accounts, U.S. Steel appeared primed to pounce on the domestic steel
market turnaround.”

Then, after the
market closed on April 25, 2017, shareholders got some bad news: USS was
reporting for the first quarter a net loss of $180 million; a
negative operating cash flow of $135 million; a “significant decline” in the
company’s flat-rolled segment; and a reduced 2017 outlook that “widely
missed analyst expectations, including a 35-percent reduction to 2017 EBITDA
guidance.”

Market reaction to
the news was “swift and severe,” the suit states, with USS stock opening on
April 25, 2017, at $24.18, 22 percent down; and finally closing at $22.78,
down 26 percent.

The suit then cites
a raft of analysts befuddled by the USS quarterly report:

* Jefferies called
the results “abysmal.”

* Axiom speculated
that the company’s full-year results were “set to resemble a Nightmare on
Elm Street.”

* Morgan Stanley
“was struggling to understand how U.S. Steel’s costs moved up so much in the
first quarter 2017.”

The suit
specifically accuses USS executive officers of “making false statements” and
“failing to disclose adverse facts known to them about U.S. Steel,” and so
“deceived the investing public regarding U.S. Steel’s prospects and
business”; “artificially inflated the price of U.S. Steel common stock”; and
caused investors “to purchase U.S. Steel stock at inflated prices and suffer
economic loss.”

The suit then cites
the “true facts, which were known by defendants but concealed from the
investing public” during the six-month period in question:

* “While the
company was implementing its Carnegie Way program, it was focused on cutting
costs and was not making investments necessary to position U.S. Steel so
that it could respond to improved market conditions.”

* “Defendants’
failure to invest in improving capital assets during the industry downturn,
in order to report apparent financial improvements, meant that U.S. Steel
had higher production costs than its competitors, even in the face of
improved pricing, which would negatively impact its financial results.”

* “Defendants were
forestalling expensive capital equipment upgrades in order to boost the
company’s short-term financial results at the expense of long-term financial
performance, leaving U.S. Steel in need of accelerated, costly equipment
upgrades that would leave the company years away from generating improved
financial performance.”

* “Defendants’
statements regarding the company’s outlook and expected financial
performance were false and misleading and lacked a reasonable basis when
made.”

* “After the above
revelations were revealed to the market, the price of U.S. Steel stock
declined significantly as the artificial inflation was removed.”

The suit is seeking
compensatory damages on behalf of all class members; reasonable costs and
expenses incurred in the action; and any other equitable relief deemed
appropriate by the court.